By David Glovin and Christine Harper
July 7 (Bloomberg) -- Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said.
Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software. Teza Technologies LLC, a Chicago-based firm co-founded by a former Citadel Investment Group LLC trader, said it suspended Aleynikov, who started there on July 2.
At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft poses a risk to U.S. markets. Aleynikov transferred the code, which is worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public yesterday. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
What the prosecutor says is an outrage by itself and completely insane why should others manipulate US markets as its very obvious that Goldman does it already - is he out of his f... mind?
Goldman has proven in many cases as you could even read in Rolling Stones that they walk any extra mile for dominating the rip off industry as they screwed up LTCM and they did that in all instances up to the very recent AIG robbery of taxpayers money.
They generate a piece of software which can manipulate markets the SEC should be all over them with the FBI as they indeed dominate the program trading by far, which is nothing else but a market manipulation. Have this prosecutors lost their common sense or is just anyone on Goldman's payroll this days. DA is a starting point for a political career we know that and Goldman a generous sponsor even Obama knows that.
.....
‘Preposterous’
The prosecutor added, “Once it is out there, anybody will be able to use this, and their market share will be adversely affected.”
The proprietary code lets the firm do “sophisticated, high- speed and high-volume trades on various stock and commodities markets,” prosecutors said in court papers. The trades generate “many millions of dollars” each year.
“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
The prosecutor added, “Once it is out there, anybody will be able to use this, and their market share will be adversely affected.”
The proprietary code lets the firm do “sophisticated, high-speed and high-volume trades on various stock and commodities markets,” prosecutors said in court papers. The trades generate “many millions of dollars” each year.
Not even going to attempt to elucidate in how many different ways the first sentence above is just...plain wrong. At least it is refreshing that none other than Goldman's own de facto attorney admits that the firm has created a piece of code that permits "market manipulation." When Goldman is the perpetrator, the manipulation is conveyed via "fair ways." And when the manipulator is someone else, the ways become "unfair."
Of course, Goldman will be happy to know that according to PACER, Aleynikov has just posted bail and is freely roaming the grounds of SDNY, EDNY and District of New Jersey, however the "PTS Office shall be permitted, to the extent possible, to monitor the deft's use of computer's or other electronic devices at his home or place of business to ensure that the deft does not access the data that is the subject of this criminal action." Something tells me monitoring Sergio's (former) place of business will yield a lot more clues in the prosecution's gathering of data for criminal action.
Maybe I am too drunk but... what the hell is going on here? When will Kevin Mitnick appear stage left and hold the world ransom for one hundred million dollars after announcing he has hijacked every SPY ETF ever put in circulation.
P.S. Any reference of the "Serge" individual referenced above to the now (in)famous Sergey Aleynikov is, of course, purely intentional.
But its interesting that Russians teamed up to build an operation in Chicago to run high frequency trading based on Goldman's software. Teza was just recently founded by Misha Malyshev who was running Citadels HF ( program trading) operation. This is a very capital intensive business and I would wonder how they could raise that kind of money - there has to be a big player in the background with extraordinary capital resources even Russia could be the background player and that might explain Obama's serious look while the press conference with Medvedev was running he could not put up his usual salesman look. Something troubled him deeply - though behind the scenes he might have run into a tough meeting with the Russian Bear but I rather see a connection to this software theft as well as cyber terrorism will get the playfield and even the Chinese are training 1000 engineers for this purpose in a special squad. I am sure we just see the tip of the iceberg in this case as there must be much more behind the curtain but we never might hear about it in the mass media.
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